Starwood Capital Group to Acquire Corus Bank Assets
I received a phone call 10 minutes ago from a friend to give me the news that it appears that Starwood Capital Group will acquire the remaining assets of Corus Bank. Unfortunately, Reuters beat me to the punch and reported the story about an hour ago. The rise and fall of Corus Bank has been a story that I have chronicled extensively over the past two years because of the obvious connection the company has to the Miami condo market. The final chapter has now closed and it will be up to Starwood Capital Group to establish the floor for the condo market here in South Florida.
Onyx on the Bay Note Purchased By Hyperion Onyx Partners, LLC
I learned late last week that Hyperion Onyx Partners, LLC, an affiliate of Hyperion Development Group purchased the note for Onyx on the Bay. The note was held by the now defunct Corus Bank and was acquired just days before the Chicago-based bank was taken over by the FDIC. Hyperion Development is the developer behind Marina Blue, one of the few recently constructed condo developments that have been able to close 100 percent of their units. This represents Hyperion Development Group’s first soiree into asset acquisition. Details of the transaction have yet to be disclosed.
Onyx on the Bay is a 118-unit bayfront condo development located in Edgewater Miami at 665 NE 25 Street. Condo closings began on July 31, 2007. It’ll be interesting to see at what price the unsold condos at Onyx on the Bay are priced at if Hyperion Development Group chooses to resell them immediately. There are currently 11 condos available for sale on the MLS at an average price per square foot of $368. 3 of the 11 condos are short sales. There are currently zero pending sales and a condo hasn’t closed at Onyx on the Bay in over a year. My guess is that pricing will need to be at around $175 per square foot in order for the unsold inventory to move.
Another Look at Corus Bank
This has been a post that has been on my mind for over two weeks.
Before reading any further, please read the post I published on September 10, 2007 entitled, “Corus Bank – One of the Many Publicly Owned Real Estate-Related Companies to See Trouble Ahead“. There are two things that amaze me most about that post. One, the growth in the number of comments left by visitors astonishes me. That was one of the most informative posts that I’ve ever written yet it only received 6 comments. Now, I write about a CVS opening at the base of Everglades on the Bay and there’s over 130 comments. I guess, as they say “If you build it, they will come”. Two, I’m amazed by just how dead on target my words turned out to be.
As the post mentions, Corus Bank had, and still has, significant exposure in the Miami condo market. The day that the September 2007 post was published, Corus Bank’s stock price closed at $12.50. Currently, the stock price is hovering around the $1 mark and has dipped as low as 82 cents per share recently. A few weeks ago, Corus Bank announced that they would be deferring interest payments on their debt and had also applied for funds under the U.S. Treasury’s Troubled Asset Relief Program (TARP).
Corus Bank was successful in having its construction loan for Quantum on the Bay and Marina Blue paid in full in 2008. I believe they also had equal success with Continuum North Tower. How will Corus Bank fare in future months, however, with the condo developments that either recently began closings or have yet to begin? The following are some of the condo developments in South Florida in which Corus Bank still has an outstanding construction loan along with the original loan amount:
- Artecity – $60,300,000
- Caribbean Miami Beach – $124,700,000
- Infinity at Brickell – $140,300,000
- Ivy at Riverfront – $130,400,000
- Jade Ocean – $288,115,000
- Mint at Riverfront – $191,800,000
- Onyx on the Bay – $44,100,000
- Paramount Bay – $216,000,000
Of the condo developments listed above, Onyx on the Bay is the only one in which Corus Bank has recovered most of its loan amount judging by the closing figures I published in September 2008. They may be very close to being paid in full on it, if they they haven’t been already.
Closings for condos at Jade Ocean, Paramount Bay and Mint at Riverfront have yet to begin. I’ve heard that closings for condos at Infinity at Brickell began a few weeks ago. These four condo developments alone represent slightly over $800M in outstanding loans. All four condo developments were priced relatively late in the game and could prove to be disastrous for an already troubled Corus Bank.
On top of this, it was announced a little over a week ago that the developer of Tao, a 396-unit condo development in Sunrise, Florida, handed the property over to Corus Bank with work unfinished and closings yet to begin. The construction loan extended by Corus Bank to the developer of Tao was in the amount of $126,250,000. Additionally, Corus Bank purchased the mezzanine loan on Tao in the amount of $32.3M, which included principal plus outstanding interest.
It appears that Corus Bank could be wobbling on its last leg. If it were to go bankrupt, the Miami condo market could see a number of bulk sales occur in 2009. Even if it were to be granted federal funds from the Troubled Asset Relief Program, how long could that money delay the inevitable?
